The objective of this paper is to study the performance of a combined heat and power (CHP) system that uses two power generation units (PGU). In addition, the effect of thermal energy storage is evaluated for the proposed dual-PGU CHP configuration (D-CHP). Two scenarios are evaluated in this paper. In the first scenario, one PGU operates at base-loading condition, while the second PGU operates following the electric load. In the second scenario, one PGU operates at base-loading condition, while the second PGU operates following the thermal load. The D-CHP system is modeled for the same building in four different locations to account for variation of the electric and thermal loads due to weather data. The D-CHP system results are compared with the reference building by using conventional technology to determine the benefits of this proposed system in terms of operational cost and carbon dioxide emissions. The D-CHP system results, with and without thermal storage, are also compared with that of single-PGU CHP systems operating following the electric load (FEL), following the thermal load (FTL), and base-loaded (BL). Results indicate that the D-CHP system operating either FEL or FTL in general provides better results than a single-PGU CHP system operating FEL, FTL, or BL. The addition of thermal storage enhances the potential benefits from D-CHP system operation in terms of operational cost savings and emissions savings. Copyright (c) 2013 John Wiley & Sons, Ltd.